Lehman Brothers Structured Note Investors are Pursuing Arbitration to Recover Losses

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By: AboutLawsuits | Published: November 3rd, 2008

The recent Lehman Brothers bankruptcy has left investors with Lehman structured notes holding basically worthless investments. Many of these investors are now contacting stockbroker fraud lawyers throughout the United States to help them file FINRA arbitration claims against the brokers who sold them these structured notes as conservative and safe investments.

Lehman Brothers, which was once the fourth largest investment bank in the United States, filed for bankruptcy on September 15, 2008, marking the largest filing in history. The bankruptcy was caused by heavy investments in the subprime mortgage market, which many individual investors were not aware of when they purchased the notes that were sold as “principal protected” securities.

Structured notes, which are also known as hybrid financial instruments or structured equities, are investments that are constructed from a combination of stocks, bonds, currencies, commodities and derivatives.

The Lehman brothers notes were sold by brokers to retail investors as a low-risk and safe investment which guaranteed 100% principal protection. However, now that Lehman Brothers has filed bankruptcy, that guarantee is meaningless.

Several investors have filed claims against their brokers alleging that they continued to recommend these notes during the months leading up to the bankruptcy, even though the brokers knew or should have known that they were unsecured obligations of Lehman Brothers, whose financial position was weakening.

There were over $8 billion worth of Lehman structured notes outstanding at the time of the bankruptcy, and approximately $2.8 billion of those were sold this year.

Most of the investors who were sold these notes were of retirement age, and were looking for fixed income without the risks associated with stocks. Many are now seeking to recover their investment losses from the brokers who recommended these notes without disclosing the full extent of the risks.

Several large institutional investors have filed Lehman Brothers lawsuits directly against former executives of the investment bank, seeking to hold them responsible for misleading the public about the company’s financial position prior to the filing. However, most retail investors do not have the resources or losses to justify such litigation.

The Financial Industry Regulatory Authority (FINRA) oversees the activities of nearly 5,000 brokerage firms throughout the United States. Most broker agreements provide that disputes between investors and their broker can be filed as arbitration claims, which is allowing Lehman Brothers fraud lawyers to pursue recovery of structured note losses as low as $50,000.00.

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There Are 8 Comments So Far • (Add Your Comments)

  1. I’ve been sold the note threw Citi UK, which, as was written in the documents, was not only capital protected, but also covered by FSCS. But now they are telling it’s not relevant?!…

  2. I lost $250,000 in Principal Protected Notes sold to me by UBS . I am age 73, retired, I was told the notes were totally principle protected and would deliver about 8 % interest per year. I did not learn these were based on Lehman bonds until the underlying value started to go down and my UBS financial advisor repeatedly told me not to worry as the investments were totally principal protected. I have been depending on distributions from my Ira to support me and family.

  3. [...] has been filed against UBS Financial Services, Inc. on behalf of all investors who were sold Lehman Brothers structured notes, also referred to as Lehman principal protection notes, by the brokerage [...]

  4. I was sold 180,000.00 worth of 100% PPN form UBS – I have only wanted, and insisted upon, conservative investments for the last 4 years. I would never have agreed to any investment that would not have protested my principle. UBS is a thieving institution that mislead not only me but thousands of other investors by selling a product to me that was touted as 100% safe when in fact it was not. I, and a group of 71 other investors, who also purchased these pieces of crap from UBS, are currently in the process of filing a FINRA arbitration case against UBS. If UBS is smart ( there’s an oxymoron) they will capitulate and make us all whole before this ever gets to FINRA arbitration.

  5. My mother and I also have been injured with 80,000 which is an important part of our savings.
    structured products from Lehman were sold to individual savers such as insurance and risk-free through intermediary banks ensuring that capital was not at risk. is a big scam in USA and also has been done in the rest of the world.
    I wonder, the investment banks could not obtain deposits from the general public as commercial banks, but in deeds, through the intermediary banks, have violated that rule and have collected funds from savers by giving simple junk bonds in return with the complicity of the intermediary banks. is not this a serious violation of the law? why it has allowed these products reach individual savers
    Why the authorities do not investigate what has happened to savers who have been deceived, as the case of the sale of ARS by UBS, CITY, MERRY LYNCH to which they have imposed fines worth millions

  6. On April 5, 2008, my broker purchased Lehman Brothers Corporate Bonds without my permission. When I received the conformation, I immediately called him and over the next few weeks he kept encouraging me to hold on, until I lost all of my $50,000 investment.

  7. I have a total of 500k invested in a Lehman Principle Protected note and am suffering the same frustration as the rest of you. We are pursuing a FINRA arbitration and are at the point of setting a date for the arbitration ( arbitrators have been selected. )

    I was also considering the strategy of making a demand to the trustee ( UBS sold it but JP Morgan is the trustee ) on the note, but I don’t quite understand all the trustee’s responsibilities.

  8. A former UBS financial adviser in Vero Beach, FL) sold “Structured Products” to me and others as a “safe” investment with principal protection. He admits that he never discussed Lehman with me when he advised me in Oct. 2008 that I had lost $38,000 in Lehman products.

    UBS denies any wrongdoing even though he supports that his clients (former client in my case) were never told about Lehman or the liability of the product depending on the financial credibilty of Lehman NOT UBS.

    I still do not understand why SIPIC is not responsible for this fraudulent activity. Does anyone know the latest?

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